285 F.Supp. 949 (S.D.N.Y. 1968), 66 Civ. 3617, Sabre Shipping Corp. v. American President Lines, Limited

Docket Nº:66 Civ. 3617.
Citation:285 F.Supp. 949
Case Date:June 12, 1968
Court:United States District Courts, 2nd Circuit, Southern District of New York

Page 949

285 F.Supp. 949 (S.D.N.Y. 1968)




No. 66 Civ. 3617.

United States District Court, S.D. New York

June 12, 1968

Strasser, Spiegelberg, Fried & Frank, New York City, for plaintiff (Leon Silverman, Victor S. Friedman, Allen Isaacson and Kenneth Lipper, New York City, of counsel).

Baker & McKenzie, New York City, for defendants Japan Line, Ltd., Kawasaki Kisen Kaisha Ltd., Mitsui O.S.K. Lines, Ltd., Nippon Yusen Kaisha, Ltd., Yamashita-Shinnihon Steamship Co., Ltd. (Andreas F. Lowenfeld, New York City, of counsel).

Page 950

Donovan, Leisure, Newton & Irvine, New York City, (A. Vernon Carnahan, Peter J. Gartland and John H. Wilkinson, New York City, of counsel) for defendant Maritime Co. of The Philippines.

Hill, Betts, Yamaoka, Freehill & Longcope, New York City, for defendants American Mail Line, Ltd., Java Pacific & Hoegh Lines, Klaveness Line, Knutsen Line, Pacific Far East Lines, Inc.

Kirlin, Campbell & Keating, New York City, for defendant P & O Orient Lines.


RYAN, District Judge:

In this suit brought under Section 4 of the Clayton Act (15 U.S.C. § 15) to recover damages for violations of Sections 1 and 2 of the Sherman Antitrust Act (15 U.S.C. §§ 1, 2), defendants have moved to dismiss the complaint for failure to state a claim under Rule 12(b)(6), F.R.Civ.P., or to dismiss or stay further proceedings in the suit pending the final determination by the Federal Maritime Commission of matters allegedly within its exclusive primary jurisdiction, and in the alternative, the Japanese shipping company defendants have moved for summary judgment.

The moving defendants are MARITIME COMPANY OF THE PHILIPPINES, a corporation engaged in the shipping business organized under the laws of the Philippines, and the five largest Japanese shipping companies organized under the laws of Japan. All the defendants, with one exception, are members of the Japan Atlantic & Gulf Conference and New York Freight Bureau (Hong Kong) Conference, and all have an agent and place of business in this jurisdiction.

Prior to 1962, these two conferences carried the vast majority of all goods shipped in these two trades and during that same period plaintiff was their most significant competition, carrying as it did, 15% To 20% Of the total cargo in these and accounting for 80% Of its business.

The suit was filed on October 29, 1966 against 37 shipping lines, members and associate members of two conferences, and against the two Conferences. The suit has been discontinued against the Conferences and most of the shipping companies.

The complaint charges that, beginning in 1962 and continuing through 1963, the defendants engaged in a combination and conspiracy to unreasonably restrain and monopolize the Hong Kong-United States and Japan-United States trade and commerce; that the object of the conspiracy was to drive plaintiff, a New York independent shipping line not a member of the conference engaged in transporting cargo by water in both trades, out of these trades; that the conspiracy succeeded in forcing plaintiff out of business and into Chapter XI arrangement proceedings, thus eliminating competition and enabling defendants to gain a monopoly over these trades. The means utilized by defendants to accomplish this is charged to be the lowering of rates in the Hong Kong-United States trade to an unreasonably low level below the actual cost of transporting the commodities. The reduction of these rates, the complaint charges, was effected by the two Conferences purporting to act under existing Conference Agreements Nos. 5700 and 3103, which had been approved by the predecessor agency to the Federal Maritime Commission. Under these agreements, the members are, under prescribed circumstances, permitted to establish and fix uniform rates as among themselves for the particular trade to which the conference relates: Conference Agreement No. 5700 could fix rates for the Hong Kong trade only and Conference Agreement No. 3103 for the Japan trade only.

It is further charged in the complaint that, in violation of the Shopping Act and their Conference Agreements, the members of both Conferences, purporting to act under their respective agreements, met and agreed to and did lower

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rates for both trades, and that, when this proved unsuccessful, they achieved further rate reductions in these two trades by agreement of the members of the Japan Conference alone, which agreement was wholly illegal because it was outside the scope of its Conference Agreement No. 3103 which, as pointed out, permitted it to fix rates for the Japan trade only. Following the elimination of competition, the defendants are charged with raising the rates to their earlier level and denying United States importers and exporters the benefits of free competition.

All the agreements, it is finally charged, are outside the the scope and protection of the Shipping Act (46 U.S.C.A. 801 et seq.) because they violate Section 18(b)(5) of the Act in that they are detrimental to United States commerce and trade and in violation of the antitrust laws.

Plaintiff seeks damages and an injunction enjoining defendants from attempting to drive plaintiff out of the shipping business involving United States commerce and enjoining defendants from instituting rate changes without first obtaining a determination from the Federal Maritime Commission that such rate changes are not detrimental to United States commerce.

Although plaintiff alleges that, during all times relevant to the allegations of the complaint, the members of the Freight Bureau and The Japan Conference purported to act pursuant to existing conference agreements, respectively FMB Nos. 5700 and 3103, approved by a predecessor agency of the Commission the complaint really proceeds on two theories.

One is that there was a combination and conspiracy among defendants not sanctioned by any agreement approved by the Federal Maritime Commission. This is based upon the charge that defendants met in Kyoto, Japan, from October 29-November 1, 1962 under authority of their Japan Conference Agreement and allegedly agreed to effectuate reductions in the rates for the transportation of cargo from Hong Kong. Plaintiff asserts that those agreements were 'wholly illegal because inter alia outside the scope of' the Japan Conference and because that agreement did not authorize defendants to fix rates for cargo originating in Hong Kong.

The second theory is that the rates fixed by defendants subsequent to November 1, 1962 were 'wholly illegal because detrimental to the commerce of the United States and thus outside the scope and protection of the Shipping Act'. Though admitting that the Freight Bureau and Japan Conference Agreements permit the parties to fix rates, plaintiff claims that the rates permitted by those agreements 'may not, under the specific provisions of Section 18(b)(5) of the Shipping Act of 1916, as amended, 46 U.S.C. Section 817(b)(5), be so unreasonably low as to be detrimental to the commerce of the United States.'

In support of their motions, defendants urge that this Court lacks jurisdiction because their rate agreements are exempt from the antitrust laws under the Shipping Act, Section 15; that whether they acted outside their agreements presents a question for the primary jurisdiction of the Commission, and that the antitrust laws do not extend to international ocean transportation unless the restraints complained of were effected within the...

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